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Malay Mail
16-05-2025
- Business
- Malay Mail
MoF: Malaysia's Q1 GDP growth hits 4.4pc, surpassing previous year's performance as govt prioritises continued investment push
KUALA LUMPUR, May 16 — A rousing performance across key economic sectors lifted Malaysia's gross domestic product (GDP) by 4.4 per cent in the first quarter of 2025 (1Q 2025), in line with the GDP advance estimates and higher than the 4.2 per cent growth recorded in 1Q 2024. The Ministry of Finance (MOF) said the GDP growth in 1Q 2025 was buoyed by the services (5.0 per cent), manufacturing (4.1 per cent), and construction (14.2 per cent) sectors. It said stronger consumer spending during the Chinese New Year and pre-Hari Raya festive periods, the implementation of the new minimum wage in February 2025, and the recent increase in civil servant salaries further fuelled the growth momentum. 'Private consumption, undergirding Malaysia's economy, grew 5.0 per cent in 1Q 2025. 'This was supported by encouraging labour market performance with a decline in the unemployment rate to 3.1 per cent and benign inflation at 1.5 per cent — both marking the lowest levels recorded under the Madani administration,' Finance Minister II Datuk Seri Amir Hamzah Azizan said in a statement today. He said that investments continued their growth momentum in 1Q 2025, recording a 9.7 per cent increase, reflecting the positive response from global investors to the Madani government's pro-development policies and a strong emphasis on sustainability as outlined in key national policy frameworks, including the National Energy Transition Roadmap (NETR). MOF said the government is also actively working to attract more high-quality foreign direct investment (FDI) to stimulate growth while maintaining a dynamic ecosystem after recording the decade-high domestic investment in 2024. It said the government would continue to closely monitor both domestic and global economic developments and is prepared to implement responsive and appropriate policy measures to ensure that Malaysia's economic growth remains consistent, sustainable, and inclusive for the well-being of all segments of society. 'The government remains committed to maintaining investor confidence and protecting domestic industries amid an increasingly complex global economic landscape,' it said. MOF noted that the government acknowledged the presence of downside risks to the official 2025 GDP growth forecast of 4.5 per cent to 5.5 per cent, owing to tapering global demand, heightened geopolitical tensions, and the rising prevalence of protectionist trade policies, particularly the recent announcement of reciprocal tariffs by the United States (US). 'The Madani government will revise the 2025 GDP forecast once the reciprocal tariff situation stabilises and greater clarity emerges,' it said. In the meantime, MOF said the government would implement several mitigation measures to further strengthen the country's fundamentals including efforts to boost domestic direct investment (DDI). It added that government-linked investment companies (GLICs) have committed to invest a combined RM25 billion in DDI this year under the GEAR-uP programme. Meanwhile, MOF said the government will continue to engage the US in bilateral trade discussions while also leveraging multilateral platforms such as the Asean and the Regional Comprehensive Economic Partnership (RCEP) to uphold a fair and conducive global trade environment,' MoF said. It said that the government would redouble efforts to diversify export markets and secure new trade agreements to mitigate the impact of global trade disruptions. 'These efforts have already borne early fruit in 2024, as reflected in increased investment and exports to non-traditional markets such as Egypt, Pakistan, and Cambodia, alongside stronger export growth to other Asean member states,' it said. MOF added that the government will also work to accelerate the implementation of the Madani Economy reform agenda, focusing on fiscal sustainability, strengthening Malaysia's economic value chains, protecting the welfare of the broader population through social safety nets, and unlocking the potential of the local talent pool. — Bernama
CNA
16-05-2025
- Business
- CNA
Malaysia's economy grows 4.4% in Q1
KUALA LUMPUR :Malaysia's economy grew 4.4 per cent in the first quarter of 2025 from a year earlier, below market expectations but in line with government estimates, data showed on Friday. Economists surveyed by Reuters had forecast annual gross domestic product growth would come in at 4.5 per cent in the January to March period. On a quarter-on-quarter seasonally adjusted-basis, first quarter GDP expanded 0.7 per cent vs a 0.2 per cent contraction in the previous quarter. The economy grew a revised 4.9 per cent in the final quarter of 2024. The central bank said first quarter economic growth was driven by sustained household spending growth amid positive labour market conditions and policy support, as well as steady expansion in investments, and continued export growth. "Growth was affected by lower oil and gas production, and normalisation in motor vehicle sales and production," Bank Negara Malaysia Governor Abdul Rasheed Ghaffour said at a press conference. Growth in 2025 is expected to be slightly lower than the 4.5 to 5.5 per cent forecast range, Abdul Rasheed said, adding a new estimate would be announced in the next month or two. "The balance of risk to the growth outlook is currently tilted to the downside," Abdul Rasheed added. Last month, the central bank said it will have to lower this year's forecast economic growth range of 4.5 per cent to 5.5 per cent due to the global trade war. Prime Minister Anwar Ibrahim said earlier this month that the suspension of most of the U.S. tariffs until July meant the economic impact was manageable for now, but Malaysia was unlikely to meet its growth forecast this year.
Malay Mail
14-05-2025
- Business
- Malay Mail
Economists dial back Malaysia's 2025 growth forecast amid softer household demand
BENGALURU, May 14 — Malaysia's economy likely grew at its slowest pace in a year in the first quarter, losing momentum due to weakened household consumption and exports, according to a Reuters poll of economists. Advance estimates showed that key sectors, including services and manufacturing, expanded more slowly than in the previous quarter as consumers tightened spending and export momentum faded amid US–China trade tensions. Southeast Asia's third-largest economy expanded 4.5 per cent in the first three months of the year compared to the prior-year period, according to the 8–13 May poll of 21 economists, in line with a preliminary estimate released in April. The economy grew 5 per cent in the fourth quarter. 'The higher-frequency data such as retail sales, car sales, loan growth and imports of consumer goods are moderating relative to Q4 2024. This is an indication that consumption is likely to be on the softer side,' said Ahmad Nazmi Idrus, head of economics at CGS International Securities. Maintaining growth momentum this year would be difficult due to uncertainty from the global trade war, he said. In April, economists lowered Malaysia's 2025 consensus growth forecast to 4.3 per cent from 4.7 per cent earlier in the year, citing trade tensions and weaker domestic consumption, while the International Monetary Fund (IMF) has cut its forecast to 4.1 per cent. Malaysia faces a duty of 24 per cent on exports to the United States starting in July unless a bilateral deal is reached. Prime Minister Datuk Seri Anwar Ibrahim said this month the US government had agreed to further negotiations, but the economy was unlikely to meet its 4.5–5.5 per cent 2025 growth target due to the trade war. The US and China – Malaysia's two major trading partners – agreed a temporary 90-day truce on tariffs this week, but risks to economic growth remain. In response to a weaker outlook, Bank Negara Malaysia (BNM) has announced a reduction to the statutory reserve requirement (SRR) ratio of 100 basis points to 1.00 per cent, effective Friday, which will inject roughly RM19 billion into the banking system. Economists have also adjusted their outlook on interest rates, now forecasting one rate cut in 2025 in a Reuters poll, from an earlier projection that rates would remain flat at 3 per cent this year. 'Escalating... trade tensions under a second Donald Trump administration, which have resulted in higher and more widespread US tariffs than those imposed during his first term, could prompt BNM to ease monetary policy more,' said DBS economist Chua Han Teng. — Reuters
Reuters
14-05-2025
- Business
- Reuters
Malaysia's economy likely lost momentum in first quarter, trade risks weigh
BENGALURU, May 14 (Reuters) - Malaysia's economy likely grew at its slowest pace in a year in the first quarter, losing momentum due to weakened household consumption and exports, according to a Reuters poll of economists. Advance, opens new tab estimates showed that key sectors, including services and manufacturing, expanded more slowly than in the previous quarter as consumers tightened spending and export momentum faded amid U.S.- China trade tensions. Southeast Asia's third-largest economy expanded 4.5% in the first three months of the year compared to the prior-year period, according to the May 8-13 poll of 21 economists, in line with a preliminary estimate released in April. The economy grew 5% in the fourth quarter. "The higher frequency data such as retail sales, car sales, loan growth and imports of consumer goods are moderating relative to Q4 2024. This is an indication that consumption is likely to be on the softer side," said Ahmad Nazmi Idrus, head of economics at CGS International Securities. Maintaining growth momentum this year would be difficult due to uncertainty from the global trade war, he said. In April, economists lowered Malaysia's 2025 consensus growth forecast to 4.3% from 4.7% earlier in the year, citing trade tensions and weaker domestic consumption, while the International Monetary Fund (IMF) has cut its forecast to 4.1%. Malaysia faces a duty of 24% on exports to the United States starting in July unless a bilateral deal is reached. Prime Minister Anwar Ibrahim said this month the U.S. government had agreed to further negotiations, but the economy was unlikely to meet its 4.5%–5.5% 2025 growth target due to the trade war. The U.S. and China - Malaysia's two major trading partners - agreed a temporary 90-day truce on tariffs this week, but risks to economic growth remain. In response to a weaker outlook, Bank Negara Malaysia (BNM) has announced a reduction to the statutory reserve requirement (SRR) ratio of 100 basis points to 1.00%, effective Friday, which will inject roughly 19 billion ringgit ($4.4 billion) into the banking system. Economists have also adjusted their outlook on interest rates, now forecasting one rate cut in 2025 in a Reuters poll, from an earlier projection that rates would remain flat at 3% this year. " tensions under a second Donald Trump administration, which have resulted in higher and more widespread U.S. tariffs than those imposed during his first term, could prompt BNM to ease monetary policy more," DBS economist Chua Han Teng, said. ($1 = 4.3150 ringgit)
CNA
13-05-2025
- Business
- CNA
Investments in Malaysia's semiconductor industry remain uncertain amid tariff tensions, say experts
KUALA LUMPUR: Malaysia's booming semiconductor industry has been facing pressures from uncertainty caused by United States President Donald Trump's tariffs, as well as competition from the rest of the region. The world's sixth-largest exporter of semiconductors was hit last month with a 24 per cent levy on all US-bound exports, except semiconductors and several other electronics. It was part of sweeping tariffs imposed by Trump on almost all of America's trade partners. While he suspended the tariffs for 90 days shortly after, the reprieve will come to an end in less than two months. Within this period, Malaysia - where 60 per cent of exports to the US comprise semiconductors and electronic goods - will have to negotiate a trade deal with the Trump administration. Experts say that to meet this challenge, the Southeast Asian nation must actively work to enhance its position, including moving towards more advanced chip design and production. UNCERTAINTY HALTS INVESTMENTS Last year, Malaysia launched its National Semiconductor Strategy to help the sector move up the value chain by attracting investments to achieve this goal. The government's roadmap is aimed at getting firms to shift from outsourced semiconductor assembly and testing to more high-end work such as integrated circuit design, high-end manufacturing and niche equipment. 'There will be a lot of wait-and-see approach with new investments and greenfield investments,' said Sharmila Suntherasegarun from Malaysian public policy think tank IDEAS. The researcher at IDEAS' economics and business unit added that attracting investments in research and development, as well as a higher value-added segment of semiconductors would be more challenging amid such uncertainty. Ongoing trade tensions between the US and China have also cooled the investment appetite of small- and medium-size enterprises (SMEs). 'My point is that we don't invest in uncertainty. We don't invest in possibilities. We invest in certainty. So, I would say SMEs should not react on the basis of perceived opportunity at this point in time,' said William Ng, president of the SME Association of Malaysia. RETAINING BIG CORPORATIONS Some American multinational chipmakers such as Intel are also facing pressure from the Trump administration to reshore their operations back to the US. Semiconductor and electronic goods from chipmakers, including American firms, currently form 60 per cent of Malaysian exports to the US, said Malaysia's Investment, Trade and Industry Minister Zafrul Abdul Aziz. Any tariff imposed by Washington on Malaysian semiconductor goods would impact these companies, affecting employment and making it more expensive for them to increase investment in Malaysia, according to Tricia Yeoh, an associate professor of politics and international relations at the University of Nottingham Malaysia. She added that the semiconductor manufacturing sector 'represents precisely the type of manufacturing jobs that the US would like to bring back (to) its shores'. The Malaysia Semiconductor Industry Association is hoping that these chipmakers continue to operate in the country. 'Intel was here, AMD was here, HP was here. You have TI, IBM, Dell, everybody was here. And we contributed significantly to their growth. I feel that it means something,' said the association's president Wong Siew Hai. He added the association must reach out to these firms' operations in the US to explain to the Trump administration how Malaysia has contributed to their growth and will continue to do in the next decade. MORE POSITIVE OUTLOOK Apart from tariffs, Malaysia's semiconductor industry is also facing competition from the Southeast Asian region. BlackBerry CEO John Giamatteo said the region is dynamic, with lots of growth. 'People adopt technology faster here, I think in many ways, (compared with) many… other markets,' he told CNA. Industry groups have called for increased productivity so that the sector can remain competitive. Experts also said the country's semiconductor sector needs to shift towards more advanced chip design and production. 'Seize this opportunity now during times of uncertainty to work on productivity. Make the company as competitive as possible, so that we are ahead of everybody else,' said Wong. He added there is a need for firms to move up the value chain and improve on their supply chain. Manufacturers like Austrian company AT&S said Malaysia must stay the course and double down on its national semiconductor strategy. The tech giant is ramping up production in its Kulim plant with new products and new customers in the pipeline. AT&S' executive vice-president Ingolf Schroeder said: '(It is) important to have the right workforce in place.' He added that having a talent programme that can supply the required number of fresh graduates for the electronics and semiconductor sector is vital. 'I'm pretty sure there will be an end (to) all these tariff and geopolitical discussions, and then Malaysia is perfectly positioned.'
